Unit trusts are a simple and convenient investment option for people who have a long-term investment horizon but do not have either the time, desire, or expertise to invest directly in financial markets.
Unit trusts can be particularly suitable for smaller, first time investors as they offer the opportunity to establish a broadly diversified portfolio of assets with a relatively small amount of money.
However, larger investors can also benefit from unit trusts as they provide access to the expertise of professional investment managers.
When you invest in a unit trust fund, your money buys 'units' in that fund, at a price that is struck for that particular day. Over the period in which you invest, the unit trust price will move up and down as the value of the investments with the unit trust fund rise or fall. Returns from a unit trust fund are typically calculated based on movements in the bid (or withdrawal) unit trust price and assume any income distributions paid to investors are reinvested in the fund as additional units.
Benefits of unit Trusts
You gain several benefits from pooling your money in a trust with other investors.
- Potentially superior returns: Unit trusts provide potentially superior returns to fixed deposits over the longer term, providing investors with the opportunity to build real wealth.
- Easy and affordable investment: unit trusts are a convenient and low-cost way of investing in financial markets. They enable investors to invest in a wide variety of diversified portfolios of shares, bonds and other financial instruments they would not necessarily be able to afford as individuals.
- Diversification of risks: With a relatively small investment, a collective investment provides access to a broad spread of different shares and investments. This diversification helps to reduce your risks because it makes you less dependant on the performance of one company.
- Expertise in Professional Management: Unit trusts are managed by highly qualified investment managers and investment specialists whose full-time job is to make investment decisions. Few people have the time, skills or experience to actively manage their investments and research the best way of making money.
- Value for money: unit trusts are designed to give investors good value for money. The pooling of money increases the buying power by enabling the payment of lower dealing and administration costs than if the investor had invested directly in a selection of investments. The pooling of investments also enables the fund manager to buy shares, money market instruments such as treasury bills, bonds and other investments which would be beyond the reach of the average investors.
- Liquidity: unit trusts are flexible and easily accessible. You can sell all or part of your investment at any time. However, we recommend that investments should be viewed as medium to longer term of 3 to 5 years or more in order to benefit from market cycles.
- Tax efficient: Unit trusts are highly tax efficient investment. A unit trust fund does not pay tax on its income, either from dividends or interest. In addition, unit trusts do not pay tax on capital gains.
- Safe and Transparent: Unit trusts are strictly controlled the Capital Markets Authority under the Capital Markets (Collective Investment Schemes) Regulations, 2001. The regulations impose duties and responsibilities on the key functionaries of the fund including fund manager, custodian and trustee. The fees and charges are transparent and are published in the Information Memorandum. Information on the investment performance is provided in a report audited by external auditors. A Unit trust scheme has a Trust Deed, the legal document establishing the trust, and an Information Memorandum, of which copies are available to any investor upon request.
Our Offering
At Natbank we offer the below Unit Funds which have different risk exposures as investors have different risk appetites. These funds include:
- The Natbank Money Market Fund: Under this type of fund, money is invested in liquid interest bearing securities that have a maturity of less than 12 months. These securities include bank deposits, and other short-term money market instruments including short- dated treasury bills and commercial papers. The Fund is best suited for investors who require a low risk investment that offers capital stability, liquidity and a high income yield. The Fund is a good safe haven for investors who wish to switch from a higher risk portfolio to a low risk, high interest portfolio, especially during times of high stock market volatility.
- The Natbank Equity Fund: The objective of this type of Fund is to offer superior returns over the medium to longer term by maximizing capital gains through investing in listed securities. This fund is designed for investors seeking medium to long term capital growth in their portfolios and who want to gain exposure to equity investments. The fund is suited to investors who want to invest their money over a period of at least 3 years and beyond. The Fund has a medium to high risk profile. Due to the volatile nature of the stock markets, risk is usually reduced through holding a diversified portfolio of shares across different sectors.
- The Natbank Fixed Income Fund: The main objective of this Fund is to achieve a reasonable level of current income as well as maximum stability of the capital invested. Funds are invested in interest-bearing securities that include, treasury bills, treasury bonds, preference shares, corporate bonds, loan stock, approved securities, notes and liquid assets and any other securities that are consistent with the portfolio’s investment policy.The Fund is suitable for investors who are seeking a regular income from their investment, including those who intend to secure a safe haven for their investments in times of stock market instability.
- The Natbank Balanced Fund: The investment objective of a Balanced Fund is to offer investors a reasonable level of current income and long term capital growth. This would be achieved by investing in a diversified spread of equities and fixed income securities. The Fund is suited to investors who seek to invest in a balanced portfolio offering exposure to all sectors of the market. It is also suitable for pension schemes, treasury portfolios of institutional clients, co-operatives and high-net worth individuals amongst others. The Fund is a medium risk fund and has a medium risk profile.
